Vertu Motors Share Discussion Threads

[ed 123] 21/10/2019 19:56

You may be right, f15jcm. If you are, then I'm due for some losses.

I could be misguided but I took note of Tony Bramhall's buying of Lookers' shares in quantity. He's been in motor industry management for 50 years and is currently a non-exec at Lookers. He ought to know the risks associated with the FCA investigation at Lookers.

Ok, Vertu is a different company but they run dealerships for some of the same car manufacturers. Financing arrangements are likely to be very similar across the industry.

If the stockmarket has overestimated the risk, then now (or the past month) could be a once in a decade chance for a punter like me to buy cheaply and for management or private equity to get a good takeover deal.

[f15jcm] 21/10/2019 18:31

Interesting indeed. I like the company and it is the pick of the sector for me but the FCA investigation into motor finance makes the whole industry uninvestable at the moment IMO.

[ed 123] 21/10/2019 16:04

Buyer(s) were keen today. Shares went up 9% and finished at the day's high.

Algorithm trading or Brexit relief or corporate activity?

See what tomorrow brings.

[sphere25] 10/10/2019 11:07

Thanks for the post DaveBowler. I have nipped in for a few VTU at 33p and put it on the main watchlist.

VTU looks interesting. I do feel this isn't a million miles away from a long term tuck away and hold. This sector has been absolutely pummelled with bad news, after bad news, after more bad news.

These operating metrics and the asset backing do say a hell of alot IMO:

"2020E P/E of 6.5x falling to 6.0x in 2021E and an EV/EBITDA of 3.1x falling to 2.9x with a dividend yield of c.5% backed up by our average implied intrinsic value per share of 72.4p and net tangible assets per share of 46.1p."

Clearly there could be a further deterioration, but I'd say a significant amount of the doom and gloom is already in the price and VTU comes out a beneficiary of the demise of others - debt is always the killer.

The market tends to look forward about 9 months. There is plenty of doom and gloom out there and many stocks are trading on far too high a multiples considering the profit warnings to follow.

At this lowly valuation and the asset backing though, a warning gets bought up imo. The 9 months further out that the market soon looks at won't justify the lowly rating here either imo.

Let's see how much of a mess the political meddlers make and how much is in the price already.

Interesting one!

[davebowler] 09/10/2019 11:39

Zeus;
Trading in line
Vertu has delivered a robust set of H1 results, demonstrating clear outperformance. We are maintaining our underlying trading assumptions but incorporate the impact of IFRS 16 into forecasts. This has a net £0.4m impact to adj. PBT forecasts but is cash and net debt neutral. While the outlook is no doubt uncertain, we believe the Group is well positioned to cope with market uncertainty given its strong balance sheet, rising FCF generation (FCF yield in 2021E of 9.9% rising to 11.4% in 2022E) and strong track record of delivering disciplined growth.

§ Interim results: Vertu has delivered resilient H1 results demonstrating clear market outperformance against what remains a difficult economic backdrop as well as relentless cost pressures as previously flagged. Revenues were +5.6% YOY, and +2.3% on a LFL basis. Gross profits were +4.1% in absolute terms, with gross margins broadly stable at 10.5% (10.6% in H1 2019). Gross margins in new and used vehicles softened by 30bps and 70bps respectively driven by the tougher trading environment, albeit this was partially offset by a 60bps improvement in gross margin in Fleet and Commercial and 360bps improvement in aftersales (80 bps on a like-for-like basis which excludes the impact of the Ford parts reorganisation).

§ Key performance drivers: The group saw a 10.1% decline in new car units on a LFL basis, albeit with GPPU up to £1,418 from £1,365 last year driven by strong pricing disciplines and hitting OEM targets to earn bonus income. The Group outperformed the market in new fleet cars, growing like-for-like volumes including agency volumes by 13.8% against a decline of 1.3% in the UK fleet market. In used, like-for-like volumes and revenues were up 1.6% and 3.3% respectively despite a softening consumer environment. The Group achieved an 8.5% increase in the Group’s like-for-like service revenues in the Period. The like-for-like gross margin percentage on vehicle servicing rose to 76.9% (H1 2018: 75.8%).

§ Forecasts: We leave our underlying trading assumptions unchanged but incorporate the impact of IFRS 16. This has a net £0.4m negative impact on adj. PBT forecasts but is cash and net debt neutral. We now expect adj. PBT in 2020E of £23.5m going to £25.0m in 2021E. We incorporate the impact of disposals YTD, increased financing costs and lower working capital into our cash flow, resulting in lower net debt number for the full year. In our view, maintaining forecast at this juncture is a signal of the strength of the group’s performance YTD and potential for outperformance compared to the sector in the full year results.

§ Investment view: We believe the long-term valuation remains compelling at a 2020E P/E of 6.5x falling to 6.0x in 2021E and an EV/EBITDA of 3.1x falling to 2.9x with a dividend yield of c.5% backed up by our average implied intrinsic value per share of 72.4p and net tangible assets per share of 46.1p.

[mortimer7] 04/10/2019 08:14

SMMT have issued the new car registration unit numbers for September 2019 this morning, which shows a 1.6% increase compared to September 2018.
Total 343,255 versus 338,834.

September 2018 total was unusually low due to the implementation of WLTP regulations, so whilst up this year, in context the result is not all that good.

[mortimer7] 05/9/2019 08:09

SMMT have issued the new car registration unit numbers for August 2019 this morning, which show a 1.6% drop compared to August 2018. Total units 92,573 versus 94,094 LY.
After February, August is the UK's quietest month for registrations so the numbers in isolation aren't too significant.

[mortimer7] 30/8/2019 09:29

Pre-close trading update should be out Monday or Tuesday (Half year 31/8/19).

[mortimer7] 05/8/2019 08:11

SMMT have issued the new car registration unit numbers for July 2019 this morning, which shows a 4.1% drop compared to July 2018. Total 157,198 versus 163,898.

[mortimer7] 22/7/2019 09:32

New Chairman appointed...

[mortimer7] 04/7/2019 08:16

SMMT have issued the new car registration unit numbers for June 2019 this morning, which shows a 4.9% drop compared to June 2018. Total 223,421 versus 234,945.
Also at half year stage 2019 is down 3.4% versus 2018.
Considering Brexit was due to happen in March, didn't & then the delays, plus WLTP & all the other stuff going on, I don't think this is too bad.

[zoolook] 29/6/2019 13:41

As if there aren’t enough external difficulties in the sector the competition are creating problems of their own

[mortimer7] 27/6/2019 15:26

Lookers ...FCA, ouch!
Pendragon new CEO March, quit today.

[woodwards26] 24/6/2019 16:38

Over the years I have followed owned both VErtu and Lookers and mostly lookers have traded at twice the price of Vertu give or take Penny or two.I no longer hold or have any interest in holding any shares but I keep following .Recently this has changed with lookers falling and Vertu rising . Based on nothing more than my opinion that the relationship between the two prices is right.I think that lookers are too cheap and Vertu are yet to fall to something below 35 fairly soon.My choice is to stay out of the market but if I held both I would decrease my Vertu stake and increase lookers for a while.Long term both are great companies but perceived uncertainty about brexit effect on car dealers could send both down for a while.Just my humble opinion

[woodwards26] 17/6/2019 20:45

I wish there was a huge stock of used cars cos I find sourcing used cars the single most difficult thing to do !!!!

[f15jcm] 14/6/2019 16:44

PDG's management wasn't very good according to everything I've seen. Probably why there's been a clearout and a degree of kitchen sinking followed by some director share purchases. I think LOOK's sell-off has been unjust and has created an opportunity. VTU has very limited downside given its NAV in my opinion.

[mortimer7] 13/6/2019 10:35

MRF, yes I actually read what they said, and I don't believe most of the specific problems will affect other listed dealers anywhere near as badly.
Obviously you disagree on Vertu.

Out of interest, Vertu shares in issue at these points in time:
May 2014 340.2m March 2016 397.2m June 2019 374.5m

[f15jcm] 12/6/2019 21:29

I don't think PDG's performance is entirely reflective of the market. MOTR are doing nicely and they deal exclusively in used cars. LOOK's trading statement wasn't so bad either though their stock isn't looking too clever.

[my retirement fund] 12/6/2019 16:13

Mortimer did you actually read what they said?New car sales are poor and margins have been slashed to the bone just to compete! Meanwhile theres a huge derf, a nationwide overstock of second-hand motors that are simply not being shifted.This is bad news for shareholders here as their board, pre brexit were gleefully issuing new shares like confetti to buy other dealers up right at the top of the market.This will end up a penny share imo.

[mortimer7] 12/6/2019 15:05

Terrible RNS from Pendragon this morning. Problems of their own making. Their failings could well prove beneficial to other listed dealers in the short/medium term. Although
today, everyones share price seems to be suffering a knock on effect.

[mortimer7] 05/6/2019 08:12

SMMT have issued the new car registration unit numbers for May 2019 this morning, which shows a 4.6% dip compared to May 2018. Total 183,724 versus 192,649.
"underlying economic and political instability continues to affect consumer and business confidence".

[mortimer7] 09/5/2019 14:18

A very basic point on valuation:
TNAV 44.9p. Current share price 39.5p

Cambria Autos TNAV 32p. Current share price 64p
Marshalls TNAV 102p. Current share price 166p

So there's massive scope for re-rating IMO, as effectively the market is entriely discounting the value of Vertu's trading business.